Blog - Page 6 of 54 - Arizona Medical Marijuana Law

How Bob Dole got America Addicted to Marijuana Taxes

Brookings: “As states legalize marijuana, more marijuana businesses are opening across the country. An obscure 1982 brainchild of Bob Dole’s Senate Finance Committee, section 280E of the federal tax code, is hitting state-legal marijuana sellers in the pocketbook—right now. 280E, which says taxpayers cannot deduct costs of selling federally illegal drugs, is not just helping fund the federal government. It’s also hampering marijuana advertising and marketing—to the satisfaction of nervous parents, and to the consternation of profit-seeking marijuana promoters. 280E was more a political statement than a model of tax policy, and it can’t eliminate marijuana advertising. But it does discourage that advertising, so it may be one of the most useful marijuana tax laws we can imagine. And while some anti-advertising proposals run afoul of the commercial free speech doctrine, 280E is constitutional. So 280E may help slow down Big Marijuana. If so, an anti-advertising tax rule like 280E might come in handy if the public ever musters the strength to take on Big Alcohol and Big Tobacco.

By On the Net|2017-02-04T07:38:56-07:00December 18th, 2015|Stories & Articles, Tax Issues|Comments Off

Arizona Pot Prohibitionist Won’t Debate in Favor of Legalization

Phoenix New Times: “A right-wing Sedona group advertises what promises to be the throwdown of the year: A debate on the merits of marijuana legalization between staunch pot prohibitionist Sheila Polk on one side and fellow anti-marijuana activist Seth Leibsohn on the other. Yes, you read that right: The group says Leibsohn will take a pro-legalization stance in the debate. Leibsohn, a conservative AM-radio talk-show host, is the chair ofArizonans for Responsible Drug Policy, a group formed to combat an adult-use legalization measure expected to be on the 2016 Arizona ballot. Yavapai County Attorney Polk is the group’s vice chair.”

By On the Net|2015-12-21T18:58:02-07:00December 18th, 2015|AZ Legislation, Stories & Articles|Comments Off

ASU Student Appeals Medical-marijuana Ban on Campus

Arizona Republic: “Arizona is the only state where medical-marijuana patients can face felony charges if they use or possess it on a college campus. An Arizona State University student is asking an appeals court to overturn the law that makes it illegal for him to have physician-recommended medical marijuana in his dorm room. Andre Maestas, 20, an ASU junior and medical-marijuana cardholder, was arrested in 2014 and charged with a felony for having 0.6 grams of weed in his room on campus, roughly the equivalent of one joint.”

By On the Net|2015-12-22T06:15:43-07:00December 14th, 2015|Stories & Articles|Comments Off

Highlights of the Arizona Marijuana Legalization Initiative (AZ-CRMLA)

Marijuana Politics: “MPP’s Arizona marijuana legalization initiative, which has banked 100,000 signatures so far, about two-thirds of the goal. The complete text with hyperlinks and my notations (as my math teacher would say, “show your work”) is available as a PDF download. Here are the highlights:

By On the Net|2017-02-04T07:38:56-07:00December 14th, 2015|AZ Legislation, Stories & Articles|Comments Off

Arizona Voters Evenly Split on Legalizing Pot

Phoenix New Times: “Arizona voters are split nearly 50-50 on adult-use marijuana legalization, according to a new poll showing the need for supporters to work together if they want to end pot prohibition next year. Overall, 49 percent of voters support and 51 percent oppose the idea of “recreational” marijuana legalization, says the poll released on Tuesday by the Morrison Institute at Arizona State University and the Walter Cronkite School of Journalism.”

By On the Net|2015-12-14T18:41:23-07:00December 2nd, 2015|AZ Legislation, Stories & Articles|Comments Off

New Times Sparks Change in How Arizona Investigates Drivers Suspected of Using Pot

Phoenix New Times: “Questions by New Times about statistics related to marijuana and driving have caused Arizona officials to make changes to state traffic-accident reports. New checkboxes referencing marijuana will be added to accident forms, possibly as soon as next year, says Alberto Gutier, director of the Arizona Governor’s Office of Highway Safety. . . . In several interviews with Gutier, New Times had asked why the state wasn’t gathering more information about the possible influence of marijuana on highway safety.”

By On the Net|2015-12-14T18:45:37-07:00November 30th, 2015|Stories & Articles|Comments Off

Pot Doctors Push Boundaries

Associated Press: “When it comes to oversight of boundary-pushing doctors, enforcement practices vary in the 23 states allowing medical cannabis. . . . pot doctors fill a void left by physicians unfamiliar with marijuana’s health benefits and fearful of endorsing what the federal government regards as a controlled substance, cannabis advocates say.”

By On the Net|2017-02-12T07:41:24-07:00November 29th, 2015|Stories & Articles|Comments Off

Arizona Supreme Court Rules Medical Marijuana Patients Not Immune from DUI Prosecutions

Associated Press: “The Arizona Supreme Court ruled Friday that medical marijuana cardholders don’t have immunity from prosecution under a state DUI law that prohibits drivers from having in their bodies any amount of marijuana or its chemical compound that causes impairment. But the state high court’s unanimous decision Friday also said cardholders can try to show in court that they didn’t have enough of the marijuana compound THC in their systems to be impaired.”

By On the Net|2017-02-12T07:41:24-07:00November 20th, 2015|AZ Marijuana Law Lawsuits, Marijuana Crimes, Stories & Articles|Comments Off

The Harvard of Pot

Washington Post: Jean Kennedy has a BS in biology and a master’s in special education. Now, she’s trying to decide what to do with her third degree: a certificate of achievement from Oaksterdam University, the Harvard Business School of marijuana. . . . Horticulture 102 is one of the many subjects Kennedy studies at Oaksterdam, whose storefront campus is set amid the hip cafes, restaurants and cannabis dispensaries of downtown Oakland. Founded in 2007, the school sees itself as a training ground for citizen advocates in the fight to legalize marijuana.”

By On the Net|2015-11-16T07:26:46-07:00November 16th, 2015|California News, Stories & Articles|Comments Off

Cottonwood May Relax Pot Restrictions

journalaz.com: “The city of Cottonwood is moving forward with changing its rules when it comes to governing medicinal marijuana growing facilities. . . . The new proposals eliminate size restrictions on cultivation and infusion facilities.”

By On the Net|2015-11-16T07:48:11-07:00October 31st, 2015|Stories & Articles|Comments Off

Tax Court Spanks Another Dispenary

The U.S. Tax Court in an October 22, 2015, memorandum decision called Canna Care, Inc., vs. Commissioner ruled that a California medical marijuana dispensary owed back federal income taxes of $229,473, $304,090, and $339,604 for 2006, 2007, and 2008, respectively. The IRS used Internal Revenue Code Section 280E to disallow deductions that would be otherwise have been deductible if Canna Care’s businesses did not involve “trafficing” in a controlled substance.

Section 280E states:

“
[n]o deduction . . . shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.

It is indisputable that marijuana is a schedule I controlled substance.

Section 280E applies to deny deductions if all of the following facts exist: (1) there is a trade or business; (2) that involves trafficking in (3) a controlled substance. The Tax Court found that all three elements exited with respect to Canna Care, Inc., for the years at issue and denied all deductions.

Canna Care is a California mutual benefit corporation that is prohibited by California law from distributing marijuana for profit. Nevertheless, the non for profit medical marijuana dispensary business was very, very good to its shareholders Bryan Davies and Lanette Davies.

“Petitioner had 10 employees in 2006 and 2007 and 6 employees in 2008. Mr. Davies determined salaries. During the years at issue the shareholders’ salaries far exceeded the salaries paid to any other employees. Mr. Cowen was paid $88,700, $152,900, and $144,000 during 2006, 2007, and 2008, respectively. Mr. Davies was paid $79,200, $160,900, and $146,200 during 2006, 2007, and 2008, respectively. In addition to their salaries, petitioner made payments for its shareholders’ automobiles in the amounts of $31,459, $24,609, and $23,942 during 2006, 2007, and 2008, respectively. Petitioner’s manager, its highest paid nonshareholder employee, was paid $36,000, $55,600, and $52,000 in 2006, 2007, and 2008, respectively. Mrs. Davies was paid $27,000, $66,480, and $74,000 during 2006, 2007, and 2008, respectively. Petitioner’s other employees made an average of $24,494.17, $12,173, and $12,314.29 during 2006, 2007, and 2008, respectively.”

The Tax Court ruled that “section 280E prohibits petitioner from deducting any amounts paid or incurred during the years at issue in connection with its trade or business that respondent disallowed.”

Section 280E imposes a very heavy and some would argue an unfair price on businesses that sell marijuana in states that have legalized the drug.

Lawsuit Shows Ugly Side of Arizona Medical Marijuana Dispensary Business

Phoenix New Times: “The blunt realities of the state’s medical-marijuana industry are exposed in a remarkable ruling on a lawsuit between business partners that features allegations ranging from a ‘lack of financial controls’ to a shady seed deal in a parking lot. The lawsuit’s between the two partners of Uncle Herbs of Payson, one of the state’s notable licensed medical-marijuana dispensaries. Andrew Provencio . . . and partner Tiffany Young have been engaged in a vicious civil war since late December over a company worth millions. Now, following Superior Court Judge Randall Warner’s ruling, Young has been found in contempt and has one week to turn over nearly $50,000 in funds allegedly spent on ultra-high-quality cannabis seeds in a transaction that occurred in a parking lot.”

The dispensary license is actually held by Desert Medical Campus, Inc., an Arizona for profit corporation (“DMC”) that was administratively dissolved by the Arizona Corporation Commission on 9/23/15. The lawsuit is between DMC’s shareholders.

The principals of DMC formed a lot of entities, but failed to operate them independent of DMC. As a result, the court disregarded the separate existence of the entities and found the assets and liabilities of the entities are assets and liabilities of DMC. Here’s some interesting statements found in the Judge’s ruling dated September 16, 2015:

“The court finds that A & T Management was operated as a part of DMC and not as a separate entity. Therefore, all assets and liabilities of A & T Management were and are assets of DMC subject to the receivership. . . .

the court finds that the finances and operations of Uncle Herb’s Gift Shop were not kept separate from that of DMC. Therefore, all assets and liabilities of Uncle Herb’s Gift Shop were and are assets of DMC subject to the receivership. . . .

The court therefore concludes that Uncle Herb’s Kitchen is a part of DMC. All assets and liabilities of Uncle Herb’s Kitchen were and are assets of DMC subject to the receivership. . . .

The Receiver therefore properly assumed control over the assets of M & T Management. . . .

Golden Tomatoes, though nominally owned by Mr. Provencio’s cousin as a straw man, was part of DMC. All of its assets are subject to the receivership. . . .

The preliminary injunction prohibited either Mr. Provencio or Ms. Young from acting in any way on behalf of DMC or causing DMC to do anything except with the other’s written consent. . . .

Between March 24 and April 6, Ms. Young took $47,274.46 in cash out of DMC. . . .

Ms. Young testified that the purpose of the cash withdrawal was to purchase marijuana seeds. She testified that she had an agreement with a seller to purchase those seeds. . . .

Ms. Young did not know the seller’s name. But she testified that she trusted the seller because she knew the person who referred her to that seller. . . .

Ms. Young testified that she exchanged the cash for marijuana seeds from the seller in a parking lot. . . .

On or about April 4, 2015, Ms. Young caused DMC to sell approximately $169,000 worth of products to ‘Harvest of Tempe’
[This is a tradename owned by Nowak Wellness, Inc., an Arizona corporation that was administratively dissolved on 8/8/14.] at a 90% discount. . . .

Having found Defendant Tiffany Young in contempt, the court must determine the remedy. . . . First, with respect to the $47,274.46 in cash, the court will order that Ms. Young may purge the contempt by returning that money to the Receiver no later than October 15, 2015. . . .

With respect to the $169,000 in product sold at a 90% discount, the court will consider that transaction subsequently in whatever final accounting is made.”

Query: Did Tiffany Young violate Arizona’s medical marijuana laws when she purchased seeds for $47,274.46 from a person she did not know? When Tiffany sold $169,000 of her dispensary’s product was the buyer another licensed Arizona medical marijuana dispensary? If so, what is its name?

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